Data centres and the growing problem of power shortages 

electricity grid

Throughout the Summer, local authorities have begun to review data centre power consumption as a response to global power shortages and grid constraints. From Viriginia in the United States, to London, Frankfurt, and Dublin, governmental authorities argue that data centres are using up the local electricity capacity, and are moving to limit the growth of digital infrastructure.  

One of the challenges of the success of the data centre sector is the fact that two of the world’s largest megatrends – digitalisation and the decarbonisation of electricity grids – are happening at the same time. Over the last 18-months in particular, the acceleration of digital demand has meant the sector has already hit its 2025 projections, but grid infrastructure has not been able to keep up with demand, leading to energy demand constraints. In Ireland, for example, the state electricity grid authority, EirGrid, called a halt to plans for up to 30 potential data centres after limits to data centre construction were put in place until 2028, while the country built up enough renewable capacity to meet their electricity needs.  

Garrett Monaghan, partner for Pinsent Masons (Ireland), says that data centres operate in a competitive market for electricity, which has only increased in competitiveness due to the war in Ukraine and other global crises. Security of supply is, however, not a new concern, due to the fact that data centres are very large, static and consistent consumers of electricity.

“In a country which is moving to 60 to 70 per cent renewables, intermittency is clearly a factor, as are grid constraints,” notes Monaghan. “I would not call it a perfect storm, but it is what data centres represent in terms of an age in which we are witnessing the rapid evolution of power and how it is generated, up against the type of power that the consumer needs. In this instance, data centres need absolutely consistent, high availability power, and in Ireland, we have only got so much grid at any one time, and grid is the slowest asset to build. I think it is fair to say that the data centre industry probably had a free run on power for a considerable period of time in many countries, but there had to come a conflict point when this specific demand came up against the limits of a finite asset.” 

Problems and solutions in Ireland 

So, is the problem in the Irish grid caused by data centre growth? Or is it more of a fundamental problem with the Irish power grid and generation capacity? 

Garry Connolly is the founder of Host in Ireland, a global initiative created to increase awareness for how and why digital infrastructure coming from Ireland – with global and Irish companies – plays a unique role around the world. According to Connolly, the energy industry is going through a profound and rapid change due to the enormous challenge of electrification. While this is obviously true of many countries and regions of the globe, Connolly asserts that what makes Ireland different is the fact that the government sees data and the centres that are surrounding it as data export engines, and they are fully behind the need to keep centres as low carbon imports.  

“We are at a scientific barrier in physics in Ireland, but that can sometimes be helpful, because the problem is right on our doorstep, it is there for everyone to see, and so there is no way for anyone to argue for putting action on the backburner. We have to build the grid, smarten it up, and harvest as much of the excess renewable energy that we have. In that time, I am confident that we will see technologies probably becoming mainstream that have not been invented yet. I have lived through many years where problems were solved ten years in the future, by technology that has not even been invented right now.” 

And, if power upgrades and new connections are no longer available in the short term, how will this affect growth for the data centre sector in Ireland? 

“We have to move to a stage where we do not just measure the value of an industry based on the gross electricity inputs: it is the outputs that actually matter,” argues Connolly. “I am excited for the future. I am excited by the fact that Cisco routers and servers are less energy intensive, outputting 10 to 20 times more data per electron than they had done even in the recent past. We are going to start to see hybrid types of cooling in the same centre as air cooling, such as liquid cooling. That is fantastic for the industry as a whole.

“Moving on, if we look at the economic value of data to Ireland, it is the largest export we have. ICT and related services today amounts to $150 billion for Ireland, with our second industry being pharmaceuticals. To give some context, our legacy industry of agriculture, which is a wonderful industry in its own right, is only around $8 billion. To us, the centres are there because of data, the data is the valuable asset that then can be used and exported. When we look at a holistic view, it is the data that creates the catalyst for the jobs. We have to look at what has gone on in the data, how we productise it, how we export it, and that is growing, rather than reducing, because the value of the asset is data, not the construction side.” 

Decarbonisation and digitalisation must co-exist 

Clearly, you cannot decarbonise the planet without digitalisation, and the data centre brings  all of that together. “It is basically a confluence of different stages of development, and now, the industry itself is becoming more mature,” concludes Connolly. “Society needs to accelerate with digitalisation, the grants are also getting smarter and there are so many smart people coming into the engineering industry grids again because they are excited by the amount of change happening. Smart grids are attracting talent, which is brilliant. It is not just the data centres industry where this is the case either, it is happening across all sorts of big assets, such as district heating, hospitals, and pharmaceuticals.” 

With both issues seemingly intrinsically linked, finding a way for digital infrastructure to work in harmony with constrained electricity grids should be a top priority for authorities around the world. 

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